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(Alliance News) - Oracle Power PLC on Wednesday said it has signed a consortium agreement with its partners China National Coal Development Co Ltd and Sheikh Ahmed Dalmook Al Maktoum Private Office One Person Co LLC for the development of a coal mine and power plant in Pakistan.
The AIM-listed stock was 67% higher in London in afternoon trade at 1.13 pence a share.
Oracle said the deal establishes the proposed project shareholding structure, as required under the government of Pakistan's 2010 Independent Power Production policy guidelines.
The agreement follows due diligence signed in mid-December amid a proposed new initiative between the governments of Pakistan and China with respect to gasification of coal into fertiliser.
This new initiative runs in parallel to Oracle's remaining long-term plan to construct and operate a mine-mouth power plant on Thar block VI, located in the Sindh province of Pakistan.
Oracle explained that the agreement foresees the creation of a special purpose vehicle to develop and undertake the Thar block, with China National Coal Development Co holding a 73% interest, the private office of Sheikh Ahmed owing 15% stake, and Oracle holding the reminder. The project will be funded on a 75% debt and 25% equity basis.
Oracle said its primary responsibility will be obtaining all licences, approvals and permissions for the project as required by the Pakistani government.
"I am delighted to confirm the formal signing of this consortium agreement following two months of extensive work from all of the parties," said Oracle Chief Executive Naheed Memon.
Memon added: "The parties are united in their focus to make this project a modern and first-class mining development to build, own and operate two 660 megawatts coal based power plant, with the potential for coal to gas and liquid and coal production for trade, recognising Pakistan's growing needs for power, gas and liquids from coal."
Looking ahead, Oracle said the consortium agreement provides the necessary assurance to the appropriate Pakistani authorities of the joint venture parties' proposed equity commitments, and will allow Oracle to proceed with obtaining an letter of intent for power production from the government of Pakistan.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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